Impact of Corporate Governance on Financial Practices of New Zealand Companies

Katrin Gottschalk, CFA    Hardjo Koerniadi
22 Feb 2016
Categories: ESG, Corporate Finance

Country or region: New Zealand

Summary:
This article has been published in Applied Finance Letters, Volume 2(2), 2013, pp. 14-19.


Reference URL: http://www.aut.ac.nz/__data/assets/pdf_file/0016/443131/Applied-Finance-Letters-V2-Issue-2.pdf




Abstract

This study examines the effects of firm level corporate governance on financing policies of New Zealand firms. Using a unique self-constructed corporate governance index and employing the methodology of Fama and French (1999) of financing of firms, we can report that firms with weak corporate governance generally issue more debt and have significantly higher cost of capital than do firms with strong governance. It is further observed that corporate governance does not have significant impact on dividend policy in New Zealand.




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